How Inflation Erodes Your Savings

The market saw a bounce, with optimism building ahead of the meeting between the two presidents, just a day away. Global markets are hopeful for some form of peace agreement, and the probability of a September rate cut in the US has surged to 95% according to several polling sites.

• The Nifty ended the day up 0.5%, holding above the 24,400 level broken earlier.

• Nifty Junior gained 0.6%, looking stronger than the main index.

• Midcaps and Small Caps also saw modest gains of 0.63% and 0.64% respectively.

• Nifty Bank remained stagnant with only a 0.25% rise over three consecutive inside days.

• Gold hovered near ₹10,025 per gram, waiting for cues from the dollar index or the Fed’s next move.

Other Market Triggers

• Hindalco surged 5% on strong domestic demand.

• Nykaa jumped 5% after reporting strong Q1 revenue growth.

What to watch next ?

• While the global mood is turning positive, local economic data remains sluggish.

• The government has announced plans to boost manufacturing, though it’s unclear how different this will be from earlier initiatives like “Make in India” or PLI programs.

• The RBI is also taking steps to encourage trade and investment in rupees, allowing exporters to open INR accounts freely and enabling foreign investors to buy Indian treasuries without restrictions.

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What To Read This Week ?

The Silent Threat: How Inflation Erodes Your Savings

Many people believe that keeping their money in a savings account or as cash is the safest option. However, let's look at the numbers. Over a 10-year period, 100 rupees sitting idle can lose a significant amount of its purchasing power, effectively shrinking to just 64 rupees.

This means a 36% loss in the real worth of your money, vanishing into thin air thanks to inflation.

The Smarter Path: Harnessing the Power of Investing

Now, let's compare that to a simple investment strategy. The same 100 rupees, if invested in a broad market index like the Nifty, would have grown to 311 rupees on a nominal basis over the same 10-year period (see the above image). More importantly, when we adjust for inflation, that 100 rupees becomes 200 rupees. That's a 100% gain in your money's real worth, a stark contrast to the loss experienced by idle cash.

The evidence is clear: allowing your money to sit idle is a guaranteed way to lose purchasing power. Investing, even in the simplest of forms like an index fund, is a powerful and effective way to beat inflation and grow your wealth. It is a no-brainer to make your money work hard for you.